Core Viewpoint - The company, Shengnong Development, reported impressive half-year results despite challenges in the white feather chicken industry, achieving significant growth in net profit and market share [2][2]. Financial Performance - In the first half of 2025, Shengnong Development achieved revenue of 8.856 billion yuan, a year-on-year increase of 0.22% [2]. - The net profit attributable to shareholders reached 910 million yuan, marking a substantial year-on-year growth of 791.93% [2]. - The net profit after deducting non-recurring gains and losses was 376 million yuan, reflecting a year-on-year increase of 305% [2]. Market Strategy - The company expanded its market share through a multi-channel strategy, with C-end retail channels growing over 30% year-on-year [2]. - Shengnong Development emphasized its focus on C-end business, expecting sustained high growth over the next 3 to 5 years through market expansion and increased outlet numbers [2]. Product and Production - Shengnong Development's main products include frozen and fresh chicken products, as well as meat processing products, with a breeding capacity exceeding 700 million birds [2]. - The company reported a sales volume of 660,900 tons for raw chicken and 174,500 tons for processed meat products, representing increases of 2.50% and 13.21% respectively compared to the first half of 2024 [2]. Cost Management - The company achieved over a 10% reduction in comprehensive meat production costs compared to the same period last year, attributed to improved performance of its proprietary breeding source "901+" and increased internal usage [2]. - Shengnong Development is recognized as the first domestic company to break the foreign monopoly on breeding sources, successfully supplying domestic parent stock chicken chicks [2]. Strategic Transformation - In April 2025, the company changed its industry classification from "A03 Animal Husbandry" to "CA13 Agricultural and Sideline Food Processing," focusing on the food processing sector [2]. - The completion of the acquisition of a controlling stake in Anhui Taiyanggu Food Technology Group significantly contributed to the company's net profit, enhancing operational efficiency through industry empowerment and lean management [2].

Core Insights - China's marine aquaculture industry is experiencing significant growth, with a projected sea product output exceeding 37 million tons in 2024, contributing to the food supply for over 1.4 billion people [1] - The industry is undergoing a transformation from traditional fishing to smart aquaculture, driven by technological advancements and the establishment of a comprehensive supply chain [1][2] Group 1: Industry Development - Fujian's Ningde City and Guangdong's Maoming City are actively promoting deep-sea aquaculture, enhancing the marine industry chain from cultivation to sales [1] - The national focus on self-sufficient core breeding resources has led to the successful development of new marine species, such as the "Yellow Sea No. 6" shrimp and "Golden Tiger Hybrid" grouper, which exhibit faster growth and better resilience [2] Group 2: Technological Advancements - The implementation of intelligent deep-sea aquaculture systems, including large net cages capable of holding 1 million fish, has improved efficiency and reduced labor costs through automated monitoring and feeding [2] - China has established 169 national marine ranches, with a total water volume of 56.6 million cubic meters and an annual output of 470,000 tons, promoting ecological restoration alongside economic growth [2] Group 3: Economic Integration - The integration of various marine industries, such as offshore wind power and marine ranching, is creating new economic opportunities and enhancing value-added services [3] - Innovative combinations of aquaculture with tourism and education are leading to the development of new marine resort experiences, enriching both the economy and consumer experiences [3]

Core Insights - The article highlights the establishment of the Yuelu Mountain Laboratory as a significant national strategic initiative aimed at advancing traditional Chinese medicine and agricultural biotechnology [2][6][12] Group 1: Laboratory Overview - Yuelu Mountain Laboratory encompasses 41,000 square meters of space with 17 buildings, housing over 200 high-level research teams and more than 2,000 researchers [3][6] - The laboratory aims to create a national germplasm resource bank for traditional Chinese medicine, with a goal to store over 100,000 resources by 2030 [6] Group 2: Research and Development Achievements - The laboratory has initiated 179 specialized projects in the seed industry, focusing on core technology breakthroughs and the cultivation of strategic new varieties [3][6] - A notable achievement includes the development of China's first Class II new veterinary drug, which serves as a substitute for feed antibiotics, contributing to food safety [7][8] Group 3: Economic Impact - The extraction of the plant-based feed additive has generated $15.85 million in export revenue and has gained recognition in both domestic and EU markets [8] - The establishment of the "Xiang Jiu Wei" public brand for traditional Chinese medicine has significantly enhanced the visibility and reputation of local medicinal materials [9] Group 4: Future Directions - The laboratory is set to tackle the challenges of deep processing and comprehensive utilization of the betel nut industry over the next 7 to 10 years [9] - The laboratory has developed a comprehensive innovation matrix, including 4 functional research departments and 15 variety creation centers, targeting urgent industry needs and future directions [11]

Investment Rating - Industry rating is maintained at "Outperform the Market" [8] Core Viewpoints - The report emphasizes the importance of "self-controllable seed sources" in the context of ongoing US-China trade negotiations, particularly focusing on agricultural imports such as soybeans, corn, and wheat [4][3] - The gap in corn yield between China and the US is widening, which may accelerate the domestic biotechnology breeding industry [5] - The transition of genetically modified organisms (GMOs) into large-scale demonstration phases is highlighted, with significant policy support for the industrialization of biological breeding [6] Summary by Sections Trade and Agricultural Imports - In 2024, China is projected to import 22.13 million tons of soybeans, 2.07 million tons of corn, and 1.90 million tons of wheat from the US, accounting for 44.1%, 3.6%, and 9.0% of US exports respectively [4] - The report suggests that grain trade will be a critical area in the short term for negotiations with the US [4] Yield Disparity and Biotechnology - The US corn yield has reached 766 kg/mu by 2024, with a GMO penetration rate exceeding 90%, while China's corn yield is only 439 kg/mu, resulting in a yield gap of 327 kg/mu [5] - The report identifies the promotion of biotechnology breeding as a key factor contributing to this yield disparity [5] Policy and Market Developments - The central government's focus on biological breeding has been consistent for five years, shifting from research to application, with plans to accelerate the industrialization of biological breeding from 2024 to 2035 [6] - By 2024, GMO grain industrialization will transition from a trial phase to large-scale demonstration in eight provinces, with further expansion planned by 2025 [6] Investment Recommendations - The report recommends investing in leading companies in the biotechnology sector, including Longping High-Tech, Dabeinong, and Quanyin High-Tech, while also suggesting to pay attention to Fengle Seed Industry and Denghai Seed Industry [6]

Investment Rating - Industry rating is maintained at "Outperform the Market" [8] Core Insights - The report emphasizes the importance of "self-controllable seed sources" in the context of ongoing US-China trade negotiations, particularly focusing on agricultural imports such as soybeans, corn, and wheat [4][3] - The gap in corn yield between China and the US is widening, which may accelerate the domestic biotechnology breeding industry [5] - The transition of genetically modified organisms (GMOs) into large-scale demonstration phases is highlighted, with significant policy support for the industrialization of biological breeding [6] Summary by Sections Trade and Agricultural Imports - In 2024, China is projected to import 22.13 million tons of soybeans, 2.07 million tons of corn, and 1.90 million tons of wheat from the US, accounting for 44.1%, 3.6%, and 9.0% of US exports respectively [4] - Short-term agricultural trade is expected to be a key area in US-China negotiations [4] Domestic Yield and Biotechnology - The yield of corn in the US is expected to reach 766 kg/mu by 2024, while China's yield is only 439 kg/mu, resulting in a yield gap of 327 kg/mu [5] - The report identifies the promotion of biotechnology breeding as a critical factor contributing to the widening yield gap [5] Policy and Market Developments - The central government's focus on the industrialization of biological breeding has been consistent for five years, with a shift from research to application [6] - By 2024, the domestic GMO grain industry will transition from a trial phase to large-scale demonstration, with several provinces allowing GMO planting [6] - The report recommends key companies such as Longping High-Tech, Dabeinong, and Quanyin High-Tech for investment, highlighting their competitive advantages in the GMO sector [6]

Core Viewpoint - China's soybean industry is adapting to challenges posed by trade tensions, focusing on self-sufficiency and technological advancements in breeding and production [1][10]. Group 1: Soybean Production and Breeding - The southern soybean breeding team has achieved an increase in production by 5 million tons, with new high-yield varieties being developed [2][5]. - In 2024, China's soybean production is projected to reach 20.65 million tons, with a yield of 133.35 kg per mu, marking a significant increase from previous years [5][8]. - The southern region is a key area for high-protein soybean production, meeting domestic demand for edible soybeans, while the feed and oil markets rely heavily on imports [4][5]. Group 2: Technological Advancements - The breeding process has evolved, allowing for multiple generations of hybridization within a year in controlled environments, enhancing the efficiency of developing new soybean varieties [4][8]. - The industry is transitioning from traditional breeding methods to more advanced techniques, including the use of AI and big data, to improve breeding outcomes [8][9]. Group 3: Market Dynamics and Strategies - The trade war has prompted a shift in China's soybean import strategy, with increased focus on diversifying sources and enhancing domestic production capabilities [10][11]. - Experts emphasize the need for improved harvesting technology to reduce losses during soybean collection, which currently sees significant amounts of soybeans lost in the process [11]. - The industry is exploring alternative protein sources and crop rotations to mitigate reliance on soybean imports and enhance domestic supply [11].

1. Report Industry Investment Rating No relevant content provided in the report. 2. Core Viewpoints of the Report - In the context of the Sino - US tariff game, China has implemented tariff counter - measures, which highlights the importance of food security. The self - controllability of seed sources has become crucial, and the seed industry may receive strong policy support [1][2]. - The Chinese government has issued a plan to accelerate the construction of an agricultural powerhouse, with clear goals for different time points to ensure food supply and promote rural development [3][33]. - The Guozheng Grain Industry Index has investment value. It is more focused on the seed and grain planting fields after revision, with reasonable valuation and better performance than some major indices [4]. - The Penghua Guozheng Grain ETF and its linked funds are good investment vehicles for tracking the Guozheng Grain Industry Index [5]. 3. Summary According to the Directory 3.1 Tariff Game Background and New Opportunities for the Grain Industry 3.1.1 China's Tariff Counter - measures in Response to Sino - US Tariff Shocks - On April 2, 2025 (Eastern Time), the US government announced a "reciprocal tariff" policy. China issued a statement on April 5, strongly condemning and opposing it. On April 4, China announced a 34% tariff increase on US - originated goods and took other counter - measures [1][10][11]. 3.1.2 The Significance of Food Security under Tariff Counter - measures - China is a major food importer, and the US is an important source of its agricultural imports. In 2024, China imported 3179 tons of grain from the US, accounting for 20.2% of its total imports, a 1.3 - percentage - point decrease from 2023. The import cost of agricultural products will rise, and domestic seed industry upgrading is expected [2][11][13]. - As of April 11, 2025, there were significant price fluctuations in bulk agricultural products [17]. 3.1.3 Government Support for Accelerating the Construction of an Agricultural Powerhouse - The Chinese government issued the "Plan for Accelerating the Construction of an Agricultural Powerhouse (2024 - 2035)", with clear goals for 2027, 2035, and the middle of this century, and detailed plans for ensuring food security [3][31][33]. 3.2 Investment Value Analysis of the Guozheng Grain Industry Index 3.2.1 Introduction - The Guozheng Grain Industry Index aims to reflect the stock price changes of grain - related listed companies. After revision, it focuses more on the seed and grain planting fields, with semi - annual sample adjustments [36]. 3.2.2 Market Value Distribution and Liquidity - As of April 15, 2025, the index has a diversified market - value distribution. In terms of liquidity, 78.36% of the component stocks' weights are in the top three groups of the past - year average daily trading volume [39][40][42]. 3.2.3 Industry Distribution - As of April 15, 2025, the index is highly concentrated in the agriculture, forestry, animal husbandry, fishery, and basic chemical industries at the Shenwan primary level, and mainly in the seed, livestock and poultry feed, and grain planting industries at the Shenwan tertiary level [44]. 3.2.4 Top Ten Weighted Stocks - The top ten weighted stocks of the index have a total weight of 52.74%, with a moderate concentration. They are mainly in the core sectors of the grain industry, and have a good profitability level [47]. 3.2.5 Reasonable Valuation - As of April 15, 2025, the index's P/E ratio is 24.17 times and the P/B ratio is 2.02 times, both at relatively low historical levels. The valuation center may rise as the grain industry opportunities approach [49]. 3.2.6 Performance - From November 4, 2009, to April 15, 2025, the total return of the index is 151.08%, with an annualized return of 6.33%. Its performance is better than that of the CSI 300, CSI 500, and CSI 1000 [51]. 3.3 Fund Products - The Penghua Guozheng Grain Industry ETF, listed on August 18, 2023, is the largest and most liquid ETF product tracking the Guozheng Grain Industry Index. It has three linked funds [5][57].

Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [3][6]. Core Insights - The company demonstrates a strong competitive advantage in a declining profit environment for the industry, achieving higher profitability than the industry average [1][36]. - The company has established a self-sufficient breeding system, enhancing its market position and expected performance [2]. - The processing business is improving, with a focus on brand value enhancement and a dual-channel strategy [3]. Summary by Sections Company Overview - The company is the largest white feather chicken producer in Asia, with a complete supply chain covering feed processing, breeding, incubation, and meat processing [14]. Industry Context - The white feather chicken accounts for approximately 67% of the domestic chicken market, with slaughter volumes reaching 8.55 billion in 2024, a 3.6% increase year-on-year [28]. Profitability and Cost Management - The company has maintained a higher single-bird profit than the industry, with an estimated profit of 0.6 yuan per bird in 2024, despite overall industry profit declines [1][36]. - The company's chicken meat gross cost is projected at 8,939 yuan per ton in 2024, a 14% decrease year-on-year, reflecting effective cost management strategies [40][42]. Market Position and Expansion - The company has secured long-term strategic partnerships with major clients like Yum China and McDonald's, ensuring stable pricing and demand [1][3]. - Since 2018, the company has acquired quality assets, increasing its breeding capacity by 165 million birds and food processing capacity by 90,000 tons [1]. Breeding and Genetic Control - The company has achieved 100% self-sufficiency in breeding parent stock since 2019, with plans to increase its market share to 40% by the end of 2024, potentially adding 800 million yuan to its performance [2]. Processing Business Development - The company's food business is projected to generate 8.249 billion yuan in revenue in 2024, with a 3.7% year-on-year growth, although net profit is expected to decrease by 7% [3]. - The company is focusing on B2B and B2C segments, with B2B accounting for 79% of revenue and a strong emphasis on brand value enhancement [3]. Financial Projections - The company expects net profits of 993 million yuan, 1.06 billion yuan, and 1.21 billion yuan for 2025, 2026, and 2027, respectively, with growth rates of 37.1%, 6.8%, and 13.8% [3][5].

Summary of Conference Call Industry Overview - The conference call focused on the white meat chicken industry and specific companies, namely Shengnong and Yisheng, highlighting their long-term investment potential amidst current market challenges [2][3][4]. Key Points and Arguments 1. **Market Dynamics**: The white meat chicken industry is experiencing a significant supply gap due to the ongoing impact of avian influenza and intensified US-China trade tensions, leading to a prolonged period of reduced supply [3][4]. 2. **Supply Chain Disruptions**: Since December of the previous year, imports from the US and New Zealand have been halted due to avian influenza outbreaks, resulting in a drastic decline in breeding stock availability [4][5]. 3. **Production Decline**: The total breeding stock in the industry dropped to approximately 218,000 sets in the first three months of the year, a 45% year-over-year decrease, indicating a critical supply shortage [6][7]. 4. **Demand vs. Supply Gap**: The industry requires around 1.1 to 1.2 million sets of breeding stock, but the current production is significantly below this level, confirming a persistent supply gap [7][9]. 5. **Market Sentiment**: Previous uncertainties regarding avian influenza led to skepticism about the industry's recovery; however, the current situation is deemed more severe, suggesting a clearer path to price increases in the future [8][12]. 6. **Price Projections**: The price of parent stock and commercial chicks is expected to rise by mid-year, as the supply chain disruptions will start affecting downstream prices [12][14]. 7. **Company Performance**: Shengnong has demonstrated resilience, maintaining profitability even during challenging market conditions, while Yisheng has managed to secure limited imports, positioning itself favorably in the market [10][11]. Additional Important Insights - **Long-term Viability**: The companies discussed are not only seen as safe havens but also possess strong long-term growth potential due to their integrated supply chains and market positioning [2][10]. - **Investment Considerations**: Investors are advised to monitor the evolving market conditions closely, particularly the supply of breeding stock and the pricing dynamics in the coming months [15]. This summary encapsulates the critical insights from the conference call, providing a comprehensive overview of the white meat chicken industry and the specific companies involved.